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Lonich Patton Ehrlich Policastri

Lifetime Gifts May Have Significant Tax Advantages

November 30, 2010/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

An estate planning attorney can help you develop a plan that maximizes your assets and helps you take advantage of the estate and gift tax system.  If you are considering leaving an asset to someone upon your death, you may be interested in learning about the tax benefits of an “inter vivos” gift.  An inter vivos gift is a gift that is transferred during the giver’s lifetime.

Lifetime gifts have several tax advantages.  These advantages are particularly helpful to individuals whose estate will likely be subject to federal estate taxation.  Also, lifetime gift plans are particularly important for people whose estates will exceed the applicable estate tax exclusion ($3.5 million for decedents dying in 2009).

The main advantage of an inter vivos gift is that some, or all, of the gift may not be subject to transfer tax.  The Internal Revenue Code provides that individuals may make gifts of $13,000 per year per donee without incurring gift tax liability and without having to file a gift tax return.

In addition, interspousal gifts provide the donee spouse with an adequate estate and also allow the donee spouse to use his or her annual exclusions and estate and gift tax exclusion amounts.  The gift tax marital deduction is unlimited for a donee spouse who is a United States citizen.  For non-citizen spouses, there is an inflation adjusted annual gift tax exclusion that totaled $128,000 in 2008.

For more information about lifetime gifts, please contact us.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png 0 0 Lonich Patton Ehrlich Policastri https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png Lonich Patton Ehrlich Policastri2010-11-30 14:19:052010-11-30 14:19:05Lifetime Gifts May Have Significant Tax Advantages
Lonich Patton Ehrlich Policastri

Are You Divorcing? Here is What Not to Do Online

November 23, 2010/0 Comments/in Family Law /by Lonich Patton Ehrlich Policastri

Divorces are difficult and trying events.  Don’t add to the stress of the experience by making some common mistakes with your social networking.  Recently, a Time magazine article discussed the implications that social networking can have on a person’s divorce case.  The article noted that it is now commonplace for divorce attorneys to use information gathered on social networking websites to bolster their case against their client’s ex-spouse.  Information gleaned from social networking sites can be used to catch spouses in lies and improper behavior.  This information can affect the outcome of asset distribution, child custody, child support, spousal support, and other important divorce issues.  For the full Time article, please click here.

If you are a member of Facebook, MySpace, Twitter, or other social networking websites, you should be very careful about what you post online.  Do not post information relating to marital property, spousal support, child custody/care, or other personal information that may be relevant to your divorce case.

For more information about California divorces, please contact the divorce attorneys at Lonich Patton Ehrlich Policastri.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png 0 0 Lonich Patton Ehrlich Policastri https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png Lonich Patton Ehrlich Policastri2010-11-23 12:01:512010-11-23 12:01:51Are You Divorcing? Here is What Not to Do Online
Lonich Patton Ehrlich Policastri

The Proper Estate Plan May Help You Avoid the Expense and Hassle of Probate

November 23, 2010/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

If you are trying to decide what estate planning instruments you need in order to meet your goals and to avoid the cost of probate, you might want to look into the revocable trust.  A revocable trust is the primary testamentary transfer device used by professional estate planners in California.  A revocable trust can be used not only to manage your property during your lifetime, but it also serves to distribute your assets upon your passing.

There are several key advantages of a trust.  First, it avoids probate.  Probate is the court-supervised process of distributing a deceased person’s assets according to their will or California intestacy law.  This process can sometimes take over 6 months to complete and can be expensive.  For example, the estate of a person with only a will operating to distribute their assets after death would have to carry the costs associated with providing and preparing the initial petition, petitions for instructions, and the petition for final distribution.  In addition, costly court hearings to discuss creditor (and other) issues may be required.

Second, a trust can help to maintain confidentiality regarding your assets.  Probate proceedings are a part of the public record.  This means that anyone is able to access the information in the record regarding your assets and their distribution.  If privacy is important to you, a trust can help you achieve greater (but not necessarily complete) confidentiality.

Third, a trust also serves property management functions during your lifetime.  With a trust in place, there is no need to incur the costs and inefficiency associated with a formal conservatorship in the event of your lifetime disability or incapacity.  In addition, a trust is useful as it provides for long-term continuity for handling your assets.

For more information about wills and trusts, please contact our San Jose estate planning lawyers at Lonich Patton Ehrlich Policastri for more information.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png 0 0 Lonich Patton Ehrlich Policastri https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png Lonich Patton Ehrlich Policastri2010-11-23 11:48:212010-11-23 11:48:21The Proper Estate Plan May Help You Avoid the Expense and Hassle of Probate
Mitchell Ehrlich

There are Several Different Avenues for Pursuing a Child Support Order in California

November 23, 2010/0 Comments/in Family Law /by Mitchell Ehrlich

Child support is a certain amount of money that a court instructs one parent of a child to pay the other parent.  The court’s instruction is detailed in a document called a child support “order.”  The child support money is used to financially support the child.  If you are having difficulties supporting your child after a divorce, or if the other parent is not pulling his/her weight, you may want to contact a family law attorney for advice.

First of all, if you have been the victim of domestic violence by the other parent you may ask for child support when you are seeking a domestic violence restraining order.  If you are married or in a registered domestic partnership and have a child from that union, you can also seek child support as part of a dissolution of that marriage or domestic partnership.  The legal procedures differ slightly depending on whether or not you are married or in a domestic partnership with the other parent of the child.  Regardless, the procedures all lead to the same result, a child support order.  In order to begin this process, you must file a court case.  After you file the case, the court may then decide to grant you the order for child support.  In addition, if you do not want to file for divorce or legal separation, you can file a Petition for Custody and Support of Minor Children and Summons.  This also allows you to seek child support from your spouse.

If you are not married to, or a domestic partner of, the other parent, you may ask for child support in different instances.  First, you may ask for child support if you file a parentage case to determine who the legal parents of the child are.  Second, if you have signed a voluntary Declaration of Paternity, you may choose to file a petition for Custody and Support of Minor Children as well.

If you are confused about what is your best option for successfully obtaining child support from your ex-spouse, you may need professional guidance.  Please contact us for more information.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png 0 0 Mitchell Ehrlich https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png Mitchell Ehrlich2010-11-23 11:35:242010-11-23 11:35:24There are Several Different Avenues for Pursuing a Child Support Order in California
Lonich Patton Ehrlich Policastri

Selecting a Successor Trustee for Your Revocable Trust

November 22, 2010/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

A “trustee” is a person who is responsible for managing the trust assets.  Many individuals choose to name themselves as the trustee of the trust so they can exercise control over the trust during their lifetime.  In addition, it is wise to add a successor trustee who will manage the trust assets if you ever become incapacitated or die.

When choosing a person to serve as your trustee or successor trustee, make sure you pick someone who is reliable and honest.  The trustee has a vast amount of authority and will not be required to act under the court’s direct supervision.

Just recently, the individuals in charge of the estate of 104 year old heiress, Huguette Clark, have come under attack for some questionable dealings with her estate.  A criminal investigation is pending regarding the attorney and accountant in charge of handling Clark’s money.  The investigation is looking into the sale of her Stradivarius violin for $6 million and a Renoir painting for $23.5 million.  Click here for the full article.

To learn more about successor trustees, please contact us.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png 0 0 Lonich Patton Ehrlich Policastri https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png Lonich Patton Ehrlich Policastri2010-11-22 15:15:292010-11-22 15:15:29Selecting a Successor Trustee for Your Revocable Trust
David Patton

Different Types of California Child Custody Arrangements Explained

November 22, 2010/0 Comments/in Family Law /by David Patton

There are two types of custody:  legal and physical.  Legal custody is the right and responsibility to make the decisions about your child’s welfare, health, and education.  If one parent has sole legal custody of his or her child, he has the exclusive right to make decisions relating to the child’s health, and education and welfare.  If the parents share joint legal custody, both parents share the right and responsibility to make these decisions.

Physical custody refers to who the child resides with and is supervised by.  If one parent has sole physical custody, the child exclusively resides with and is supervised by that parent, subject to the other parent’s visitation rights.  If the parents share joint physical custody, each has significant periods of physical custody, and custody is shared in such a way as to ensure that the child has frequent and continuing contact with both parents.  However, the timeshare is not necessarily equal.

For more information about California’s child custody laws, please contact us.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.


https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png 0 0 David Patton https://www.lpeplaw.com/wp-content/uploads/2019/02/LPEP_PC.png David Patton2010-11-22 15:04:132010-11-22 15:04:13Different Types of California Child Custody Arrangements Explained
Lonich Patton Ehrlich Policastri

Estate Taxes Cause Some to Plan their 2010 Death

November 22, 2010/0 Comments/in Estate Planning /by Lonich Patton Ehrlich Policastri

Estate Taxes Cause Some to Plan their 2010 death.

Recently the AP press reported, U.S. Rep. Cynthia Lummis says her constituents are planning to die just to avoid estate taxes.[1] Currently, there is no estate tax for individuals who pass away in the year 2010. However, if legislators do not act quickly then the estate tax will revert back to a one million dollar exclusion with a 55% top rate.  Many had speculated with recent current events that Congress would not be able to pass any estate tax legislation prior to the November elections. Now that the November elections are finished, it is hopeful that some guidance will be given to the future of estate taxes.

Sometimes the Estate Tax is nicknamed the Death Tax. In reality the tax is imposed on the inheritance of wealth. For much of the country a one million dollar exclusion is generally enough to exclude their inheritances from being taxed. However, in the Silicon Valley area where detached single family homes are nearly a million dollars this exclusion can be used up rather quickly.

Bay Area Estate Value Much Higher then Average

Take for example, an estate valued at $1.5 million dollars. Although mere mention of the word million suggests this is not the type of estate that affects the majority of the population. It is actually very common in the Bay Area. Home values in the Bay Area are much higher than national average values. In a recent report, Cupertino, CA median home value is over $1,000,000.00. The median home value in Sunnyvale, CA is reportedly over $750,000.00. Since the value of a home is much more in California the one million dollar exclusion does not allow for much of the estates to transfer without tax.

Practical Calculation How Estate Tax is Applied

To calculate the Estate Tax on $1.5 million dollar estate, we must examine the Estate Tax Tables below.

Estate Tax Rates Table
Subject to Exemptions and Maximum Tax Rates Table
Estate Amount Exceeding: Up to: Is taxed at a rate of:
$1,000,000 $1,250,000 41%
$1,250,000 $1,500,000 43%
$1,500,000 $2,000,000 45%
$2,000,000 $2,500,000 49%
$2,500,000 $3,000,000 50%
$3,000,000 $10,000,000 55%
$10,000,000+ $17,184,000 60%
$17,184,000+ 55%
Exemptions and Maximum Tax Rates
Year Estate Tax Exemption Highest Rate
2003 $1 million 49%
2004 $1.5 million 48%
2005 $1.5 million 47%
2006 $2 million 46%
2007 $2 million 45%
2008 $2 million 45%
2009 $3.5 million 45%
2010 N/A (taxes eliminated) 0%
2011 $1 million 60%

In 2010, the estate would incur no estate tax and the inheritance would be the full 1,500,000.00.

In 2011, the estate would have a $1,000,000.00 exclusion, and the balance would be taxed.  The table below shows my tax calculation on a $1,500,000.00 estate in the year 2011.

Tax Rate Calculation Tax Total Inherited
0% 1,000,000 exclusion $  1,000,000.00
$1,000,000-$1,250,000 @ 41% 41% of $250,000.00 $  102,500.00 $      147,500.00
$1,250,000-$1,500,000 @ 43% 43% of $250,000.00 $  107,500.00 $      142,500.00
$  210,000.00 $  1,290,000.00

In 2010, the estate would be free of estate tax but in 2011 the estate tax would be $210,000.00. Estates of even higher values would have even more drastic tax differences in 2011. Simply put a 2 million dollar estate would have to pay nearly a million dollars in estate taxes.

This is only a theoretical computation and many people are hopeful that Congress will pass new estate tax legislation, while others argue that estate tax relief is not an important issue. Although there is no way to be certain if Congress will act, many believe that the only certain thing in life is death and taxes. However, no one says that you have to pay the maximum tax rate. In fact, each individual is permitted a $13,000.00 gift tax exemption per year.  That is only one of the many ways an attorney can assist in your estate planning.

For more information about Estate Planning, please contact us.  Please remember that each individual situation is unique and results discussed in this post are not a guarantee of future results.  While this post may include legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.


[1] CHEYENNE, Wyo. (AP) — U.S. Rep. Cynthia Lummis says some of her Wyoming constituents are so worried about the reinstatement of federal estate taxes that they plan to discontinue dialysis and other life-extending medical treatments so they can die before Dec. 31. The Associated Press: US rep.: Estate tax rise has some planning death, http://www.google.com/hostednews/ap/article/ALeqM5iE6x5QNARlHHqT8EKF-KUYWflVpg?docId=01c363eeccd542fe9dc9f9742699686b (last visited Nov. 4, 2010).

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Located in San Jose, Lonich Patton Ehrlich Policastri handles matters for clients in northern California, especially San Jose and Silicon Valley. Our services are available to anyone within the following counties: Santa Clara, San Mateo, Contra Costa, Santa Cruz, Monterey, and San Benito. For a full listing of areas where we practice, please click here.

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